America West Airlines and the union representing its 1,700 pilots reached a tentative contract agreement Friday, a move that could end more than three years of negotiations.
The three-year-deal contains a 14 percent pay raise but still has to be ratified by the union's master executive council and rank-and-file members, a process that will start Nov. 1. The union said the results of the vote could be known as early as December.
A favorable vote would put an end to what has been a contentious process that included occasional picketing. Last month, a group of a dozen pilots was so fed up with negotiations they started a drive to replace the current labor union with a new, independent one.
In March, despite the backdrop of war and an airline industry in shambles, 73 percent of pilots voted down a contract offer that included a 14 percent pay raise over two years. Capt. Terry Stadler, chairman of the America West Air Line Pilots Association, said the new agreement addresses the issues pilots wanted fixed after the failed vote.
“We've got an increase in our pay rate,” he said.“We negotiated a retirement system. We got enhancements in job protection and we achieved enhancements in the scheduling section — the work rules that will produce better lifestyles for the pilots. I think we covered all of the items that the pilots indicated were deficient.”
America West CEO Doug Parker said he was extremely pleased with the new deal and thanked negotiators and the National Mediation Board for bringing the two sides together.
“We look forward to a successful ratification process, and to continuing to build upon the positive momentum occurring at America West,” he said.
Using the failed agreement as a starting point, Tempe-based America West and the Air Line Pilots Association renewed negotiations early in September. Pilots are lobbying for better pay and scheduling and they want the company to limit its use of regional jets contracted to Phoenix-based Mesa Air Group. The biggest sticking point, however, may have been over retirement. While the company offers a 401(k) plan, it does not give its pilots a traditional pension plan.
Stadler said management agreed to significantly increase its contribution to the 401(k) plan. As for as regional jets, Stadler said new provisions will protect pilots' jobs.
He declined to discuss additional details in the agreement because he said union leaders and rank-and-file members had yet to be briefed.
John McIlvenna, a first officer and co-chairman of the committee organizing the proposed independent union, the America West Airlines Pilots Association, said few details of the agreement had been released. Given the company's recent healthy quarterly earnings, he predicted some pilots may want a better deal than has been offered.
“I am a little concerned that this was a little bit of a rush,” he said. “Anytime you rush in negotiations, I think sometimes things can get left behind, and that will be up to the pilots. They'll get to decide.”
McIlvenna predicted a closer vote than last time. He said several pilots have said they may authorize a new union to lead talks if the new agreement does not meet expectations, he said.
The contract could be approved marginally because the pilots are tired of waiting for an agreement and then they could elect to change union leadership after the vote, he said. Stadler predicted the splinter group will not be an issue if the contract is OK'd.
“You never know what's going to happen,” he said. “We've got a better product here and there's going to be some people that probably didn't get everything that they wanted, but we'll have to see.”
During talks, the company has argued it is constrained by the agreement with the Air Transportation Stabilization Board.
Following the terrorist attacks of 2001, the airline secured $380 million in loan guarantees from the federal government. Part of the agreement stipulates America West will keep labor costs within certain percentages until the seven-year loan is paid off.
In the airline's seven-year business plan, it agreed not to exceed self-imposed limitations on pay raises. If the airline violates the boundaries set in the business plan, it could be forced to repay loans earlier than planned.
The two sides have been trying to reach agreement on language in the contract regarding the company’s use of regional jets.
America West contracts through two regional carriers — Mesa Airlines and Chautauqua Airlines — which fly under the America West Express banner. The companies provide America West with planes and work forces, and typically fly to “feeder markets,” with lower populations and on major routes during off-peak times.
America West schedules the flights and splits the revenue with the regional carriers. The company's pilots fear using more regional jets will affect their job security.
America West is the nation’s eighth largest carrier with hubs in Phoenix and Las Vegas. On the New York Stock Exchange, America West shares were off 28 cents Friday to close at $12.13.